We have been conditioned to think that a "recession" means the end of the world. A "recession" is just two quarters of reduced economic activity. It is easier to envision if you convert economic activity to imply income. Then you are saying that a "recession" is six months of reduced income. You made less money the last 6 months then the prior 6 months before. Most people equate recession with depression. A depressions is a severe and prolonged downturn in economic activity. Severe is defined to be greater than or equal to 10% decline in economic activity. Recessions/Depressions occur for different reasons. There is no single ex ante indicator. It is only after the fact that you can point to something and say - "Ah! This was signaling a noticeable decline in economic activity."
Doesn't a recession have an actual economic definition? It's not some abstract concept based perception. Last I recall was something like 3 quarters of decreasing GDP.
That is how I remember it, but apparently now it is just two quarters of negative economic growth. It may vary from one nation to another.
Based on this chart, a recession happens when the 9EMA crosses the 20EMA on a Monthly chart. Thoughts?
We already had that in 2018. A recession is classically defined as two consecutive quarters of negative GDP, as of this typing.
Here is how a recession is avoided...Everyone taking a chill pill, and meditating on good music each morning before they start tap-tap-tapping away on their terminals.
Is a 20% move down considered anything? A correction? Refresh my memory please, what happened in late 2018 that caused that 20% move down? As an aside: I plotted the % drops, and the 2000 + 2008 recessions both resulted in a down move of about 50%, so maybe that's what "really" makes or defines a recession - a 50% drop? Just thinking out loud. Early 2000 Recession. /ES down to 770 from 1300 2008 Recession. /ES down to 685 from 1500 If such is the case, the next recession will be a real beauty. As of now, a 50% drop from 3400 would bring the /ES down to 1700. Recession happens every 8-10 years. What the hell happened in late 2015 (7-8 years after 2008 recession)? The conditions for a new recession were forming, but nothing happened. Did the Federal Reserve manipulate more than they usually do then to avoid a recession? If we ignore the 2015 occurrence (what maybe should have been a new recession) one could then argue 10 years after 2008, we arrive at the late 2018 occurrence. Conditions were forming then as well for a new recession, but nothing happened then either. Did the Federal Reserve come to the "rescue" there again? Thanks
In general, a 10% drop is a correction, and 20% is a bear. 2015/16 was China manipulating their currency, IIRC. 2018 Q4 was the Fed when they started raising interest rates after a 10 year hiatus. The markets had gotten so used to near-zero lending rates that any challenge to that was seen as a sign to flee equities. I do not understand the dynamics of why on that one. The 2019 ones are easier. Trump and the trade war.